Does Twitter make money?

I've been fascinated and intrigued by whether website companies make money. Google may have 'non-intrusive' and 'relevant' advertisements, but I can't imagine they making any decent margin. Just think of the costs that they incur, maintaining these huge servers, the electricity costs, the airconditioning required to keep them cool, all for storing stuff that is at least 90% junk and unwanted. (In a separate post, I would like to discuss how much of junk the world might have created).

Youtube stores videos, Flickr stores pictures, and Scribd stores documents that add up to many gigabytes. So for all of this, the expense would be enormous. As I can think, any number of non-intrusive advertisements and sale of personal information cannot make up for this.  

Twitter is a more recent phenomenon. It may have the benefit of being much modest in terms of size, since it restricts messages to 140 characters, has no images or videos. But with its popularity growing and the number of posts increasing at an exponential rate, it will be in trouble.

The one aspect that is different about Twitter is that it has no advertisements whatsoever. And by the language of what is written, I'm sure they can't figure out any pattern that they could use to sell your information, at least as of now.

It has succeeded in building a following of enormous proportion but hasn't done anything to capitalise on that yet. It could've easily put up advertisements, at least on its website, though many may be using the mobile application.

In the social networking world, it has achieved what very few have. To have so many tweeting away in such a short time is worthy of recognition.

I can see a few sources of income possible in the future. As for other such players, they could study patterns in tweets and generate targeted advertisement campaigns to select groups of individuals. They could be 'sponsored' tweets. In fact, they could have these sponsored tweeters following you.

As Google has reached out to the masses with their AdWords initiative, twitter could do the same. That way, you could have these small and medium businesses follow pertinent potential customers. This may work in the developed world better.

As a finance professional, I think they would securitise their future expected streams of income and leverage that to expand today, thus feeding their growth. Whether it will work, only time till tell. Whether it is desirable, I can say no now.

Since it runs predominantly on mobile applications in the developed world, I suppose they may have a tie-up with mobile service providers for a share in income generated because of tweets. This is yet to catch up in the developing world.

The interesting part in the case of Twitter is that they have a set of venture capitalists who have funded them. I'm sure they must be expecting and demanding a share of the pie when the cake is baked and ready to eat.

It'll be interesting to see where this leads. Till then, tweet away!